Fels just put out an update today, writing that "recent
disappointing data suggest that the global economy is
sinking ever deeper into the twilight zone that divides
sustainable recovery from renewed recession."

Here's Fels in his most recent note, looking at the new data
that's been revealed since Morgan
Stanley downgraded its growth forecasts:

Disappointing data: Since we lowered our sights
on global growth three weeks ago (see The Global Macro Analyst:
Into the Twilight Zone, August 15, 2012), economic conditions
have continued to deteriorate across emerging and advanced
economies alike:

In China, the official manufacturing PMI fell into
contraction territory for the first time in nine months in
August, with widespread weakness across the relevant
sub-components.

In India, our colleague Chetan Ahya has cut his
2012-13 GDP forecast for the third time this year and highlights
the rising risk of a “deeper macro stress scenario” in the event
of continued policy inaction (see page 8 or India Economics: Risk
of a Deeper Growth Shock Rising, September 3, 2012).

In the US, the only slight decline in the
manufacturing ISM composite index masked a greater deterioration
in the relevant underlying details, including worsening
indications for new orders, production and employment. The
composite index was helped by a jump in the inventory component,
but this is hardly a positive sign at a time of falling new
orders and points to further production cuts ahead.

In Sweden, the manufacturing PMI dropped by an
outsized 5.5 points to 45.1. Sweden’s manufacturing firms are
exposed heavily to the European and global economy, so we take
this as an(other) indication that the global trade cycle has
deteriorated further.